{
  "id": 2177392,
  "title": "What is a down payment?",
  "url": "https://urgent.news/2026/08/20/what-is-a-down-payment",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-20T16:15:23.000Z",
  "source": {
    "name": "Yahoo Finance",
    "slug": "yahoo-finance",
    "url": "https://finance.yahoo.com/news/down-payment-200052911.html"
  },
  "original_language": "en",
  "account": "A down payment is the initial amount of money a buyer pays towards the purchase price of a home when they first take ownership. This payment represents the buyer's initial equity in the property, which is the share they own outright. The remainder of the home's price is financed through a mortgage loan.\n\nFor instance, if you're purchasing a property worth $400,000 and you decide to put down 10%, you'll need to pay $40,000 as your down payment. The remaining $360,000 would be covered by your mortgage. As a result, your down payment would make up 10% of the total purchase price, thereby equating to your share of the home's value.\n\nWhile there is no strict requirement for a 20% down payment, it is often beneficial to put down more than the minimum if your financial situation allows. This is because a larger down payment can lead to lower mortgage rates, reduced monthly payments, and a smaller loan balance. Additionally, having a significant down payment provides a stronger cushion against potential drops in home values, making it easier to refinance, borrow against your property, or sell without owing more than the house is worth.\n\nYour monthly mortgage costs can be affected by the size of your down payment. For example, a 6.5% interest rate on a 30-year, fixed-rate mortgage for a $400,000 home can result in different monthly payments depending on the down payment amount. The urban Institute has estimated these payments, taking into account various credit scores and loan-to-value ratios.\n\nWhen applying for a mortgage, you will be asked to estimate your down payment, which helps the lender determine your loan-to-value (LTV) ratio, a critical factor in their decision-making process. LTV is the percentage of the home's value that you are borrowing. Lenders use this ratio to assess your eligibility and the interest rate they will charge you. Your down payment is typically paid at closing, along with other closing costs, which can be transferred via wire transfer. Funds from your down payment may also be applied to your earnest money deposit, a good faith deposit made during the home buying process.\n\nThe down payment plays a crucial role in protecting both the homebuyer and the mortgage lender. For lenders, a larger down payment implies less risk, as it reduces the potential losses in case of default. For borrowers, making a higher down payment translates to lower monthly mortgage costs and protects against becoming \"underwater\" - when the mortgage balance exceeds the home's current market value.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}